What term describes a safety net for policyholders providing coverage in the event of an insurer's insolvency?

The term that aptly describes a safety net for policyholders, providing coverage in the event that an insurer becomes insolvent, is Insurance Guaranty Fund Protection. This fund is established by state law to ensure that policyholders are protected and can recover their claims even when their insurance company can no longer fulfill its obligations due to financial failure.

This protection is particularly significant in the context of the insurance industry, as it helps maintain public confidence in the insurance system by ensuring that individuals and businesses can rely on having their claims paid, even in the unfortunate situation of an insurer's insolvency. Each state has its own guaranty association which operates under specific statutes, and the benefits typically apply to certain types of insurance, such as property and casualty insurance.

The other terms may suggest some level of safety or security for policyholders, but they do not specifically refer to the established mechanism designed to protect policyholders against insurer insolvency, which is explicitly provided by the Insurance Guaranty Fund.